Ratings Raised On Two Classes From SLM Student Loan Trust 2006-4 After Swap Termination

  • We raised our ratings on two classes from SLM Student Loan Trust 2006-4, which is collateralized by FFELP consolidation student loans.
  • The raised ratings follow the amendment of the class A-6 bonds into U.S. dollars from euros and the subsequent termination of the cross-currency swaps on class A-6.
NEW YORK (S&P Global Ratings) Jan. 24, 2019--S&P Global Ratings today raised 
its ratings on two classes from SLM Student Loan Trust 2006-4 (see list). The 
trust is collateralized by consolidation student loans originated through the 
U.S. government's Federal Family Education Loan Program (FFELP).

We considered the transaction's collateral performance, changes in credit 
enhancement, and capital and payment structures in our review. We also 
considered secondary credit factors, such as credit stability, peer 
comparison, and an issuer-specific analysis.

The class A-6 bond from series 2006-4 was amended to be a U.S. 
dollar-denominated obligation from its prior euro denomination, which 
terminated the two swap agreements for this bond with its counterparties. As a 
result of the terminations, we no longer need to apply our counterparty 
criteria regarding derivatives to this class (see "Counterparty Risk Framework 
Methodology And Assumptions," published June 25, 2013). However, we continue 
to apply our criteria for treating the U.S. government in its role as an 
insurer or guarantor as well as government agency loan-level support in 
structured finance transactions (see "U.S. Government Support In Structured 
Finance And Public Finance Ratings," published Sept. 19, 2011).
We raised our rating on the class A-6 bond from series 2006-4 to 'AA+ (sf)', 
which is constrained by the classes' inability to absorb the 15% haircut we 
apply to the cash inflows received from the U.S. federal government under 
FFELP in a 'AAA' stress scenario, as explained in our criteria. The rating on 
the class B bonds, which we raised to 'AA (sf)', reflects the stronger 
position of the class A notes due to their senior priority in the payment 

Additionally, based on the historical principal paydown of the notes and the 
transaction's structural features, we expect that they will be paid in full by 
their respective legal final maturity dates.

We will continue to review whether, in our view, the ratings assigned to the 
bonds remain consistent with the credit enhancement available to support them, 
and will take rating actions as we deem necessary.
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